Philippine Renewable Energy News Bulletin 1 – July 13, 2009
Your favorite energy technology expert is launching his maiden issue of Renewable Energy News to highlight recent developments arising from the passage of the Philippine Renewable Energy (RE) Law and its Implementing Rules and Regulations (IRR). After almost a long 10 year wait, this important piece of legislation has passed deliberations in both chambers of the Philippine Congress and Senate and was signed into law by President Gloria Macapagal Arroyo.
“Renewable energy to lower power costs – DOE official” is the banner story of Monday’s 13 July 2009 issue of Philippine Star BUSINESS Section (page C-2).
Department of Energy (DOE) Assistant Secretary Mario Marasigan said the use of renewable energy could lower power rates. Fiscal and non-fiscal incentives for projects under the Renewable Energy Act could help reduce electricity rates.
He said the Energy regulatory Commission (ERC) would see to it that benefits of the RE Law would trickle down to the consumers. “It’s the role of the ERC. The reduction will definitely be felt by the consumers. The ERC will determine the impact of all these incentives.
Taking into consideration the tariff cuts spelled out in the IRR of the RE law will likely bring down electricity rates.
“For instance, if a wind energy project is selling P7 per kWh and after applying the tariff incentives in the RE law, it went down to P4-4.50 per kWh, then it will be translated to lower rates to end-consumers. It depends on the ERC’s discretion. All rate-related issues are addressed by the ERC”, he said.
Fiscal Incentives for RE resource developers:
1) 1% of gross income on RE development projects
2) income tax holiday for 7 years
3) corporate income tax of 10% of net taxable income (versus 32-35%)
4) 10-year exemption from customs tariff duties on imported capital equipment
5) net operating loss carry over
6) accelerated depreciation
7) zero percent (0%) value added tax (VAT) rate
8) cash incentive for missionary electrification (UC ME Subsidy = full cost recovery rate – subsidy approved retail rate)
9) special realty tax
10) tax exemption on custom credits, and
11) tax credit on domestically sourced capital equipment
12) 10-year duty free importation on capital equipment
13) VAT exemption of all types of agricultural equipment and machinery
14) tax rebates on purchase of RE components
Expected Fresh Capital Investments
With the signing of the IRR of the RE law, the Philippines expects to generate up to $10 billion in fresh capital from RE development in the next 10 years.
DOE Secretary Angelo Reyes earlier said that there are already a number of interested investors that have lined up for pre-qualification at the DOE.
“Our objective is to double the power being generated from RE sources from 4,500 MW to 9,000 MW in 10 years,” he said.
Based on estimates, a RE project may need an investment of about $1-2 million per MW ($1,000-2,000 per kW).
Reyes said the Philippines has a potential capacity of 200,000 MW from RE (wind, solar, mini/micro hydro, biomass, ocean thermal, ocean wave, etc.).
“Investors are aggressively coming in as they see the potential of RE development in the country,” he said.
Philippine Renewable Energy News Bulletin 2 – July 14, 2009
“Over 100 renewable energy projects in the pipeline – DOE” is the second banner story in Tuesday’s issue of Philippine Star BUSINESS section (page B-5).
DOE Assistant Secretary Mario Marasigan said “Over 100 projects involving renewable energy (RE) are now in the pipeline following the passage of the Renewable Energy Act last year”. The stream of projects and investment proposals reflect growing investors’ confidence on the RE program of the government.
“Right after the passage of the law, we started receiving a lot of inquiries and letters of intent. From that time to date, we can be proud that more than 100 projects have been listed in our office,” he said. Among the projects under various stages of development are:
1) 80 mini & micro hydro energy projects
2) 30 wind power ventures
3) 5 biomass power plants
“The extent of our coastline and shorelines, when connected with one another, is even longer that those in the US, East and West Mumbai – meaning we have a bigger opportunity of developing our energy resources from ocean areas,” he said.
In addition, the DOE is currently in the process of evaluation 3 big hydro power facilities: Bolanog-Batang, Pulangi and Agus located in Cagayan de Oro, Misamis Oriental and Lanao, respectively. Between 150 to 300 MW of power is expected.
He said the Bolanog-Batang, Agus-3 and Pulangi-5 will be developed by a local group in a joint venture with different partners.
Prospective Investors are encouraged to get in touch with the author for assistance in selecting projects your company would wish to invest in.
Likewise, if you need project finance models that incorporate the RE law incentives, please contact the author for your specific needs.
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Marcial T. Ocampo
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